Joint Sunset Committee s1

Joint Sunset Committee Wednesday, February 8, 2012, 5:30 p.m. JFC Hearing Room, Legislative Hall, Ground Floor JSC Public Hearing – Unemployment Insurance Appeal Board ______JSC and Staff: Rep. John A. Kowalko, Jr., Chair; Rep. E. Bradford Bennett; Rep. Michael Ramone; Rep. Daniel B. Short; Sen. Michael S. Katz; Sen. David G. Lawson; Sarah Wootten, Joint Sunset Committee Analyst; and Judi Abbott, Legislative Council staff.

Absent: Rep. John C. Atkins; Sen. George H. Bunting, Jr.; Sen. Robert I. Marshall; Sen. Liane M. Sorenson

In attendance: John McMahon, Secretary, Dept. of Labor; Tom MacPherson, Director, UIAB; Elmer Newlin, Chair, UIAB; Beverly Bell, UIAB; George Dryden, UIAB; Vance Daniels, UIAB; Roy Quillen ______

Agenda: I. Welcome; Approval of JSC Meeting Minutes dated January 31, 2012 II. Overview of the Sunset Process III. Opening Comments by Unemployment Insurance Appeal Board IV. Points for Consideration/Question and Answer with JSC V. Public Comments VI. Concluding Remarks VII. Adjournment

Representative Kowalko called the meeting to order at 5:38 p.m.

I. Welcome; Approval of JSC Meeting Minutes dated January 31, 2012

Representative Kowalko welcomed everyone and thanked them for attending. The other members of the Joint Sunset Committee introduced themselves. Representative Kowalko noted that Senator Sorenson was out of town, scheduled prior to our meeting notice. Senator Bunting is also out this evening due to a family engagement that could not be rescheduled. Representative Atkins called and is out ill this evening.

At this time, there wasn't a quorum to vote on the JSC minutes dated January 31, 2012. Representative Kowalko proceeded to the next agenda item regarding the overview of the Sunset process.

II. Overview of the Sunset Process

Representative Kowalko: The Joint Sunset Committee is charged with conducting periodic reviews of agencies, boards, or commissions within our state government. This committee is a very important part of state government. The review process functions at its best with full participation and input from the public, the agencies, boards, or commissions under review and the legislature.

As background to this process leading to this evening, each May, the Joint Sunset Committee member's vote on which entities to review during the following legislative session. Those chosen by a majority of the members present at the meeting usually includes 4 to 6 agencies, boards, or commissions. Entities are notified they have been chosen for review and initial questionnaires are sent to gather information. Information contained in the response to the questionnaire as well as the subsequent correspondence and research is presented to the committee in a draft report prepared by our analyst, Sarah Wootten.

As we start to collect the data, the agencies, boards, or commissions preparing the responses to the questionnaires can realize and should realize it is a healthy process. A review by the Joint Sunset Committee is not intended to be a negative experience, but a positive opportunity to update the situation that often results in much needed revisions to the Delaware Code, which will enable that agency, board, or commission to perform. 1 Upon completion of the draft report by our staff, a public hearing is held for the agency, board, or commission at which time that entity prepares a brief presentation for the members of the Committee. That is the purpose of tonight's meeting.

Following tonight's presentation by the Unemployment Insurance Appeal Board (UIAB), the Joint Sunset Committee will review and comment on the Points of Consideration prepared by the Joint Sunset Committee analyst. There will also be a question and answer period for the Committee members and representatives from the Unemployment Insurance Appeal Board regarding the information contained in the draft report and their opening comments.

I want to point out at this time, this draft report is prepared by our analyst, but is at the behest of the committee chair and members of this committee who have specific questions, or specific concerns which may have been raised by the initiator of the suggestion that, in this case, this Commission be reviewed. So it is not something that we task our analyst with – these are legitimate questions that have been raised by committee members or the chair for an explanation at this time.

Concluding the discussion tonight, our audience will have an opportunity to comment on the Unemployment Insurance Appeal Board and the service that it provides to the people of this state. For those members who wish to speak there is a 3 minute time limit for each person from the public to address the committee this evening or a 5 minute limit if you represent the entity. To ensure that all persons who wish to speak during the public comment portion of the public hearing are able to do so, we respectfully request you keep your remarks within these time limitations. If that amount of time is not sufficient for your comments, we do allow and solicit written correspondence to be submitted to the Committee.

I would also encourage all persons who plan to speak during the public comment portion of the meeting to please consider submitting written comments as well. Any comment offered this evening is part of our public record; however, it is helpful for future meetings if the Committee members have something in a person or organization’s own words to review when considering recommendations for the Unemployment Insurance Appeal Board. If you do not have a prepared written statement tonight, you are welcome to submit your statement or comments at a later date to our staff.

The public comment period remains open until we set recommendation meetings for each entity. We will come back to consider the suggestions of the entity as well as the suggestions of the public to set those recommendations.

I would now like to offer the floor to Tom MacPherson, Director of the Unemployment Insurance Appeal Board, for opening comments at this time. For any person who is giving comments or addressing the Committee, we ask that you to identify yourself for the record. This ensures that the meeting minutes we prepare as part of this process are accurate and complete.

III. Opening Comments by the Unemployment Insurance Appeal Board

Mr. MacPherson: Thank you. I am Tom MacPherson, Director of the Division of Unemployment Insurance, and before I make my comments, I want to acknowledge Secretary John McMahon is here tonight with us, as is Elmer Newlin, the Chairman of the Unemployment Insurance Appeal Board, and I believe Mr. Newlin will have some comments after my opening remarks. I do want to thank the members of the committee for giving us this opportunity. While it is the Unemployment Insurance Appeal Board, not the Division of Unemployment Insurance or the Department of Labor that is being reviewed, we have a vested interest in this review and its outcome for the following reasons, and I have 5 points that I want to emphasize.

Titles 19 and 29 of the Delaware Code establish the Unemployment Insurance Appeal Board's function as a second level of appeal within the Unemployment Insurance system. Second, the general public and customers of the Unemployment Insurance system foresee the Unemployment Insurance Appeal Board as being directly 2 associated with the Division of Unemployment Insurance. Third, the Division of Unemployment Insurance program's federal grant, funds the Unemployment Insurance Appeal Board's administrative and operational costs. Fourth, the U.S. Department of Labor establishes and monitors Unemployment Insurance programs perform its measures that include a performance measure for the Unemployment Insurance Appeal Board. The U.S. Department of Labor holds the Division accountable for these performance measures. Finally, the Unemployment Insurance Appeal Board provides an easily accessible second level of due process opportunity to claimants and employers. Without the Board, the Delaware court system would incur a significant increase in workload as appeals from decisions of unemployment insurance appeal's referee's would go directly to Superior Court, and as a result, employers and unemployed individuals would be discouraged from filing an appeal due to cost and time considerations. I would add with regard to the performance measure, the U.S. Department of Labor's performance measure, is called average age of pending cases, and they have established a performance measure that a pending case should be 40 days or less of Delaware's Unemployment Insurance Appeal Board currently has a 36.7 days, while the national average is 86 days. So the Board is functioning very well. Thank you for giving me this opportunity for my comments.

Rep. Kowalko: Thank you, Sir. Before we go to questions, I think it would be appropriate if I let your colleague speak.

Mr. Newlin: Thank you, Mr. Chairman. My name is Elmer Newlin, Chairman of the Unemployment Insurance Appeal Board. You will have to excuse my voice. I just got out of the hospital yesterday. I just want to say that I have been a member of this Board since 2000. I've been chairman since 2001. Our influx of meetings that we have, have increased in the last four years, - …55 meetings, up to 84 meetings and 70 meetings, 69 meetings, 47 meetings… – and I just want the Committee to know that I'm privileged and honored to serve as the chairman with such a dedicated board that I have to help the citizens of the state of Delaware. Thank you.

Rep. Kowalko: Thank you. Unless there are some questions on the presentation, we are going to go to the points of consideration.

Rep. Ramone: Would it be acceptable to go through the questions, as you said, and then come back to any questions on the presentation?

Rep Kowalko: Yes. We can do that. First let me allow an introduction from Senator Katz, who just joined us. (Senator Katz introduces himself.) Thank you, Sir.

I would like to go out of order of business temporarily since we have 6 members and I would like to ask to temporarily suspend the meeting until we have a vote on approval of the Joint Sunset Committee meeting minutes dated January 31, 2012. Without objection, I would entertain a motion that we do that.

A Motion was made by Representative Short and a second by Representative Ramone to approve the January 31, 2012 JSC minutes. Vote: Yes- 6 (Rep. Kowalko, Rep. Bennett, Rep. Ramone, Rep. Short, Sen. Katz, Sen. Lawson). Motion carried.

Rep. Short requested that other members of the UIAB be introduced.

Mr. Newlin: We also have with us Mr. Don Dryden, a member of our board. Mr. Vance Daniels, a member of our board. Mrs. Beverly Bell, a member of our board, and unfortunately, we have Mrs. Carpenter out on a medical leave, and hopefully, she will be back soon.

Rep. Kowalko: Thank you, Sir.

IV. Points for Consideration/Question and Answer with JSC

Rep. Kowalko: Ok, we are going to go to the points for consideration question and answer, and have been a result of decision from the preliminary reports requested, and you would say the curiosity of members of this committee 3 in dealing with the past history and reviewing history of other Joint Sunset committee's investigations or looking at this board.

 Former UIAB members with a minimum of five (5) years of service on the UIAB were eligible to collect a pension from the state of Delaware. Currently, three former UIAB members are receiving a pension; an additional former Board member had to vest due to her age and will be eligible for a pension once that is achieved. Current UIAB members whose service has exceeded five (5) years will be eligible to collect a pension from the state of Delaware upon their resignation or replacement on the Board. (Composition of Unemployment Insurance Appeals Board- Compensation)

I know there have been questions raised and I will entertain any specific questions from the committee on the matter of pensions. We need a clarification on…getting pensions…pensions getting from this board currently, is that what you are saying?

Ms. Wootten: Currently, the people that are serving on the board wouldn't be a part of the changes that we recently made to the pension.

Rep. Kowalko: Ok, are there any questions from the committee on that first point for consideration, and that is the composition of the UIAB compensation.

Rep. Ramone: I would actually one for clarity. The first one would be a board getting a pension, again, not being as knowledgeable as some of you are, a little surprising that you would get a pension from being on a board. Yet there are other boards that get pensions also.

Ms. Wootten: I believe that there are a small number of boards that would still qualify to receive a pension – the Industrial Accident Board, the Tax Appeals Board, for example. I would have to double check, but perhaps the Board of Elections for each county. There is a very finite number.

Rep. Ramone: And my second question from Mr. MacPherson, if you don't mind, it says here in your number 3, trying to correlate it over to the question that was just asked, the Division of Unemployment Insurance program's federal grant funds, the administrative cost and operational cost and it just stuck out like a sore thumb, that we are talking about benefits. Does the federal government not - I think it is odd that federal grants pay for all the administrative costs, and operational costs. When you say administrative costs, is that also including the benefits programs for the board members?

Mr. MacPherson: Not to my understanding, it does not pay for the pensions.

Rep. Ramone: Where does that come from?

Mr. MacPherson: From the state, and the members of the board, like any other state employee, they pay into the pension fund.

Rep. Ramone: Ok.

Rep. Kowalko: Moving on to the second point for consideration.

 Consider amending the current compensation UIAB members receive by replacing the annual salary with a set amount to be paid per each meeting attended. Currently members are paid a salary which does not account for times when the Board meets less or more frequently, and members who attend the vast majority of Board meetings receive the same compensation as those who are recorded as absent from Board meetings on a more frequent basis. (Unemployment Insurance Appeal Board Meetings)

I will tell you that the genesis of some of this has been in past history of the board, this current board's review before the Joint Sunset, but also more prominently was the situation with the Violent Crime Compensation Board 4 [now known as the Victims' Compensation Assistance Program (VCAP)] when this matter was addressed about compensation for the board members as opposed to most of the boards which are now moving forward, not existing boards. We are not in the business of trying to take away something that you expect, but moving forward with new appointments, that they would be paid and that is the case of the Violent Crimes board – they will be paid per meeting as opposed to a salary. That is a point certainly for consideration by this committee and if you have a viewpoint on that, I would appreciate it. As a matter of fact, I would like to clarify, Mr. Newlin, you talked about board meetings – a number of board meetings. You had that enumerated.

Mr. Newlin: Yes, from 2006, we had 55 meetings - -

Rep. Kowalko: Ok, I just want to get a general flavor of the meetings.

Mr. Newlin: There were 47 meetings in 2008, 69 meetings in 2009, 84 meetings in 2010, and 70 meetings in 2011. Normally this board would meet once a week, but due to the workload, the appeals, we went to 2 days a week more than 1 time as the meetings show.

Rep. Ramone: I am on the record amongst our own organization of having a very high level of frustration of someone getting paid the same as everyone else and maybe coming to one meeting at the end and voting on things that maybe they don't know anything about. I think that is an incredibly disrespectful injustice done. I am not implying that is an issue. With what you guys have done, and I own small businesses, and I know how many unemployment people – it is unprecedented the numbers you guys are dealing with and I understand that. But as a legislator, I also know we all have the same job, but we don't all work the same job, and that is frustrating. I am not implying that that is an issue with the board, but trying to be a proactive person in a business world, I would always set up an environment that those who work more and do more get compensated appropriately and if people don't come, they don't receive compensation. Could either of you articulate a fair environment where compensation would be based on each meeting, or each hearing? Because if are basing it on 52, if that is your number, and you are all getting paid $X to go to 52, and you go to 70, I don't think that is fair to the people who are doing it. And for the second side of that, some people go to 70, but other people only go to 45 – I don't think that is fair, either. Do you see a way that that could be a fair process that would be set up to restructure this from a standpoint of getting compensation based on meeting attendance, or is that inappropriate.

Mr. Newlin: Sir, I have a very dedicated board that works with me. Unfortunately, sometimes things come up – sickness, a death in the family, [Rep. Ramone: Absolutely.] Anything like that. We are not a board that works in the evenings – but a daytime board. For the compensation that they receive on the workload that they have I think is very, very reasonable.

Rep. Ramone: But you do understand my point. I am not trying to be negative. I'm saying…if you are…a job performance of 52 weeks a year, and 52 meetings, and they go to 70, they should get compensation for that. The year that they were going to 47, surely shouldn't get paid the same amount they went to 70. They should make more for that, and with the ebb and flow of the economy and with the job – this is a horrible time for jobs. A lot of people on unemployment, you guys are working more than ever, I just feel it is more justified – and I'm not implying that they are not dedicated, I am saying the ones who are dedicated coming to 70 – they are not being treated fairly in one direction, and people do get sick and things do come up. But the reality is, it is a board. They should be paid when they serve and not paid when they don't serve. I just feel – that is my business sense, I'm not trying to be negative at all, and I am not trying to bring up any judgment on people's work ethics or not. I think everyone at this table my angst is in another environment where everyone gets paid whether they get paid whether they show or they don't show – in this body, and that is just an inappropriate. I think I would be a hypocrite if I didn't try to be consistent in that thinking. I'm asking your opinion. If that thinking is prevalent, and it was something that everyone agreed on, do you feel there would be a fairer level of compensation for each person on the board based on each board meeting getting a certain amount of compensation for that, rather than just getting a lump pay, whether you have a lot of meetings, not many meetings, whether I came to all of them, whether he came to half of them, or he came to all of them and I came to half - you see, is it functional? Is it practical?

Mr. Newlin: I think it would be on our board. 5 Mr. MacPherson: The only comment I would add and I'm not advocating one way or the other, but I would think if it would be my division that would fund it, or a federal grant, there should be some type of cap so that for budgeting purposes, $X amount of dollars per meeting, not to exceed $X per $1000 per year.

Rep. Ramone: I understand. You need some sort of a – I understand that. Thank you.

Rep. Short: I think I need to clarify something in my mind. This might be called a board, but in actuality we are dealing with under the Code a defined set of employees that are employees of the state of Delaware acting in this capacity, are we not? Not just available for a pension, the way I understand it, because you contribute to the pension to get a salary, other benefits are allowed under the Statute as well, are they not?

Mr. MacPherson: The members of the board are appointed board members, but they are – you can participate in the health program, and they can participate in all of the other benefit programs that any other state employee can.

Rep. Short: Right, and under the Statute because we are dealing with what in our world would be seasonal or part time or whatever you want to call that classification – classified under the Code as employees of the state of Delaware and therefore eligible to all those particular things that any other employee would be eligible to except your salary is dictated and –

Mr. MacPherson: Plus the board is performing a defined function. They are providing a second level of appeals within the Unemployment Insurance system.

Rep. Short: I just wanted to clarify that issue. I think that is a fair assessment, whether good or bad.

Sen. Lawson: How many hearings, or how many cases do you hear when you do these hearings – one a day, or 5?

Mr. Newlin: Every scheduled day, we have between 12 and 16 hearings a day. That takes at least, and we've been meeting twice a week, so you are working on 24 to 32 hearings. Also, you have to do preparation work the day before the hearings in order to have the hearings, so you just can't walk in without it. To answer Representative Ramone, this is what I'm saying. Things do happen. The board members prepare the day before, or over the weekend to go through these cases. So they are not compensated for that. Then they come before the hearing, ok, something unfortunate happens that day. They get sick, a family member dies – they've done the work to prepare for this. That is what I have to look at.

Rep. Ramone: And that is important to know. We don't necessarily know the process, so that would be very important that if they are putting in 5 hours to prepare for a 10 hour day or whatever, all of that, I agree with all of that as important. I was more or less saying, I was just trying to be righteous and fair to everyone. And if there is a way to digest that, if that is part of the formula, that needs to be digested into that in my thinking. So I didn't mean to imply that they weren't working hard or whatever, I am just trying to get a fair way that everyone is treated equally across the board. Thanks for that – the more you can educate us, the more the benefit. Thank you.

Mr. Newlin: Senator Lawson, is there any more I can answer on that?

Sen. Lawson: No, Sir. You're number was impressive.

Rep. Bennett: Yes, I just have a question. You also have a DAG that sits in with you – is that all the time that he is there?

Mr. Newlin: All the time, Sir. We have the DAG with us today.

6 Rep. Bennett: I have a question about the process of that. Is he or she, when they are there, do they just give guidance based on state laws, or do they actually give advice on the actual case you are listening to at the time. Is it on a case by case basis, or is it just in general?

Mr. Newlin: Sir, the board makes the decision – the board discusses it, deliberates on it. If we have any legal questions that arise in our decision, we go to the AG because the deputy AG answers any legal questions for us.

Rep. Bennett: So they are not really involved in any voting process, or anything?

Mr. Newlin: No they are not, Sir.

Rep. Bennett: It is just if you need legal advice on a particular state statute or federal statute?

Mr. Newlin: Or labor laws.

Rep. Bennett: Thanks.

Rep. Kowalko: I would suggest certainly that in any remarks back to our analyst that you enumerate that point of view, that perspective that you just said now about preparing now for these meetings. We are not in the business of sitting here saying how can we cut you guys out. That is not what we are here for. What we are here for is to ensure that the expenditures justify and if it isn't justified, then to suggest a way – a fair way, to justify that. But in these times that cry for austerity and we certainly don't want to deprive a dedicated, necessary group under the guise of being on the chopping block. So everything that you've put together, not in defense, - you don't have to defend yourselves here, but an explanation is more valuable to this committee where they render any kind of recommendations or decisions in the long run in moving forward.

Mr. Newlin: Ok, thank you, Mr. Chairman.

 Currently, any member, after proper notice and hearing, can be removed from the Board by the Governor for gross inefficiency, neglect of duty, malfeasance, misfeasance or nonfeasance in office. Consider amending the statute to further define neglect of duty to include members who do not attend a certain number of consecutive meetings or a certain percentage of meetings per year. (Composition of Unemployment Insurance Appeals Board- Removal of Members)

That is a suggestion that we have, if we have that type of abuse or by no fault of their own, even a sickness in term of a long health problem would sort of diffuse the efficiency of your board, too. So I think it is a suggestion for your consideration, your remarks on this that we consider amending that statute to allow for a neglect of duty. I don't know – this is a recommendation, so I mean, if we did decide that this should be an adequate reason for removal, I don't know if I would choose to define it as a neglect of duty because that terminology is much harsher than absenteeism.

Ms. Wootten: That is pretty consistent with the removal clauses that are enumerated in Title 24 for boards and commissions.

Rep. Kowalko: And they call it neglect of duty.

Ms. Wootten: Correct. That is how they define it.

Rep. Kowalko: That is a harsh terminology. But I guess it is neglect of duty whether it is by fault or by necessity of circumstances. But that is one of the suggestions that has been made so that we can ensure that we have a proper tool to keep the group at full strength. Any comments on that?

7 Rep. Ramone: Yes, just from the questions, it took me back just a little bit. But is there – what do you need for a quorum to be able to conduct meetings on the days that you come.

Mr. Newlin: 3 members is a quorum.

Rep. Ramone: Have you ever had a meeting and didn't have a quorum to have the meeting that day, ever.

Mr. Newlin: Yesterday.

Rep. Ramone: No way. Ok, - other than that, ever?

Mr. Newlin: I was in the hospital.

Rep. Ramone: I'm sorry, but does it happen often – let me re-ask the question. I didn't mean – I had no idea – I was just curious. Does it happen often, let me ask it that way?

Mr. Newlin: In 12 years- that is the first time.

Rep. Ramone: The first time in 12 years, that is what I needed to know. I'm sorry – I didn't know you were in the hospital, but if you have 3 out of 5, you are good, right?

Mr. Newlin: Yes, and a matter of fact, Sir, if you look at our review, all I had was 3 members for 9 months…and we worked the whole 9 months and did more cases than we've ever done.

Rep. Ramone: I understand. From what you just said, I'm just curious. What happens when you only have 3 members – are there only 2 spots that are not being funded or maybe that is –

Mr. Newlin: They are not reappointed by the Governor. People have left, moved out of state and they are not funded – they have to be reappointed.

Rep. Ramone: So no one is getting paid.

Mr. Newlin: Correct.

Rep. Kowalko: I don't know that we have a big necessity to have that, but to make it consistent with the Code, we should consider that…define that…even if we never have to take advantage of that. That can also give us a legitimacy if we go to the Governor when you are short-handed to say we need an appointment sooner rather than later because we are on the cusp of not being able to punish someone for not showing up, but by virtue of the fact that this is a commission and that was acknowledging your presentation – the importance of this body, that it be able to reflect its decisions with a full membership, much more appropriately, I think, that the importance of this body in reflecting the decision of such importance and magnitude should have the required amount of people on. I certainly look forward to your response to that when we bring you back before us if we do include that in the legislation.

Ms. Wootten: In order for the Governor to make an appointment for a position that they would deem to be a vacant one, that person would have to resign, or they would have to be found currently after a notice and hearing to be removed. But gross inefficiency, neglect of duty, malfeasance, misfeasance or nonfeasance, it is all a difficult standard to meet, so unless that person has effectively resigned from the position, the Governor's hands are tied. They can't appoint someone to replace them. This is a Senate confirmable board meaning that they can only be replaced when the Senate is in session, so that is why I enumerated this and brought it forth for consideration.

Rep. Kowalko: And I agree, when we do consider this in our meeting, to vote on recommendations, I think the committee will be well aware of the seriousness of why we need this in there. It is not some kind of tool to 8 admonish or portray someone as neglectful, but it is a necessary tool to keep this board in full strength which is what I was trying to arrive at.

Rep. Ramone: Representative Kowalko, I agree with that, but Sarah, could you clarify what is the Governor's obligation as far as a timeline to replace a vacancy. Is there any stipulated requirement of that…because the Senate is not out, they can call the Senate back in – these people should not have to go through 6 months of trying to run a board with 4 people knowing that if one is sick, they can get by, but if 2 are sick, they have to send everyone home, that is – is there anything addressed, or do we have the ability to influence that at all in our role here?

Rep. Kowalko: No, I don't think it is…it is the separation of powers. You can go to the Governor and tell him you would like a quicker response. I don't think this committee would ever be in a position to effectively do that. And you might not get a response that you want. There are things that are certainly relatively important in their perspective, but as to the Governor, the Governor answers to the Governor.

Rep. Ramone: I didn't mean to misspeak, what I am saying is, we are bringing a board on and expecting to have expectations of them and in order for them to be successful in those expectations, we need to have a level of due diligence – what if 3 people retired all at once? And then it is in essence, dysfunctional. What if 2 were out and as you had stated there was in the past, for how many weeks? That to me is unheard of – for nine months, one person could not be sick and hence, going back to my energy level at the beginning, I feel that people being compensated on being at the meetings in some format I think enhances that probability. If you are in the hospital, you are in the hospital. It doesn't matter what they are going to give you, you can't be there, but to be working at a disadvantage, where you cannot afford for one person to miss a meeting without having to cancel a meeting for the public, I think that is a disservice of us. I am not suggesting the Governor, this Governor, isn't doing a great job or whatever, what I am saying is, every Governor should have a responsibility to make sure that this board can function for the people who need it. Do you have any comment to that – it had to be tough on you for 9 months working with 3 people.

Mr. Newlin: We worked sick, also.

Rep. Ramone: …and you are doing that today, so –

Rep. Kowalko: Let me just jump in here for a second. We had a situation like this last year, where we had a member of a board, I think it was the executive director of the board, and I deliberately said, I don't expect you to respond to this because I wouldn't want to put – if I was sitting in your seat, I wouldn't want to put myself in a position that, in reality or not, seem to criticize the Governor's feelings about how important it is to have that in there. Certainly, I think we would jeopardize your standing with any person who would do that, and I would suggest though that if the board is short-handed for any length of time, then they should go to their Secretary of Labor who is an employee of the Governor –

Secretary McMahon: The call was made that day.

Rep. Kowalko: And I appreciate that, Mr. Secretary, and if you need any help from us as far as reiterating that, we will do that. But this committee cannot insist that and I would never want to put a current sitting board member in a position where the Governor might say, well, what is he saying, that I am not taking it seriously - so I just want to end that.

Rep. Ramone: That wasn't the intent, but I understand the way it came out.

Rep. Kowalko: I know…just want to caution…not in our position to do that. That would be unfair.

Rep. Ramone: I think I was trying to be more clear that I feel that we as an organization that is holding you guys to a level of performance also need to create an environment enabling you to be successful in that performance. I do understand the Governor does what he can. I do understand there are elections – I do understand all of that, 9 but it is not fair to hold you accountable for something without us setting up the proper environment to guarantee your success when you have good, hardworking people who want to give 100%. I don't even know which governorship it was when you went 9 months, but having you with 3 people for 9 months having a meeting a week to me is impressive that I heard that you had no meetings canceled knowing that you were down to 3 people working sick and doing what you could do to do your jobs. That is impressive, but I just think it needs to be on the record that we need to support an environment that doesn't make that the norm, but it makes that the exception, if that is fair. I don't want you to respond, because I don't want to put you in an uncomfortable position.

Rep. Kowalko: And I would suggest, Representative Ramone, that you can recommend that we expand the board to 7 members, or that we somehow make it a requirement that they can't function with less than that. I understand what you are saying, but to answer your question, no, we cannot appropriately dispose of this matter. And I also applaud the board members and this may give you a new view on adequacy of compensation, too.

Rep. Ramone: Absolutely.

Rep. Kowalko: Certainly, that is a perspective that you have to consider. This committee is sitting here not to judge whether you deserve what you get or not, whether it is reasonable to expect you to get that. Also, is it reasonable to expect you to do what you do for less than that. That is certainly something for you to consider.

Rep. Ramone: As a point of clarity, Sarah, maybe for follow-up, is it in our purview to be able to state in what we have here, documentation that the board can never reduce below 4 persons for more than a certain amount of days, or weeks, or months or whatever. Are we privileged to do that or that isn't appropriate.

Rep. Kowalko: No, we aren't able to do that. Moving on with our points for consideration.

 No more than three (3) members of the Board shall be of the same political party. Members are also prohibited from serving as an officer or committee member of any political party organization during their tenure. The statute does not require any additional criteria (e.g. professional experience, education, or knowledge of state employment laws) in order to be considered for appointment to the UIAB. (Composition of Unemployment Insurance Appeals Board- Qualifications & Training)

I would like Sarah to explain that, because I see it as a situation where we are asking for some kind of a minimal expertise.

Ms. Wootten: That goes hand-in-hand with the following point.

Rep. Kowalko: Ok, let me read that one as well.

 About half of the states that established second stage appeals have a board of review, board of appeals, or appeals board to hear cases appealed from the decision of the lower appeal tribunal. The members of the appeals boards generally represent labor, employers, and the public. Arizona, Indiana, Maine and Massachusetts require one member of the appeals board to be an attorney. California requires two members of the appeals board to be attorneys. (Other States Processes for Unemployment Insurance Appeals)

I think what is being broached here, and again, this is always moving forward. This is not – we are not in the business of dismantling an existing board. But would we make it more effective a board if it is more knowledgeable it is did have a professional, such as an attorney, or if it did have a member of that board from Labor, from business. That is the extension of us considering this area. Would it make it a better board?

Mr. Newlin: Mr. Chairman, of the members of the board, one still is in private business and an employer, and 3 other members are retired private business owners. So they are well aware of the Dept. of Labor –

10 Rep. Kowalko: Then that is a good starting point for the dialog if we have any members of organized labor, retired, for perspective.

Mr. Newlin: That would be a retired state employee.

Rep. Kowalko: You understand what we are getting at here. It is just a matter of not fairness, because then that is inviting without cause intentions of the board. In a matter of fairness to the people that are appealing, are they getting all of the perspectives of their appeals heard from a position of knowledge and experience in the area of having someone to lay off…and the contention is that it was an unfair firing, I would like to see the knowledge of that board to consider that – what has been a circumstance, something like an accusation, before in my experience, if I can make a proper judgment. I'm not in the position to do that, but I hope that we have that consideration given to future members of the board. Any questions?

Rep. Ramone: I actually do. Could you just clarify what the board's role is – is it just to listen to both sides and make a decision? Does the Attorney General's office render guidance to either side, both sides, neither side, just the board? Could you just give us a little bit of feel as to what is going on in that room because I don't know that there is any need for someone to have been in a certain environment to be able to represent fairness to both sides of the people if you are listening to what they are talking about. But could you at least give us some guidance who is helping who, and who is doing what.

Mr. Newlin: A board hearing is an appeal process from the referee's decision, which is one person. The claimant or the employer is able to make the appeal to the board with 10 days. They are able to come in if they are not happy with the referee's decision. They come in and present their case. If it is an employer's appeal, they start out bringing their case. If it is the claimant's appeal, it is their case. They plead their case and they are allowed to give us new evidence, and they are allowed to enter medical documentation, and then we question that, and the board is put up and each member can ask questions of the person or the employer, and then we have statements from them, and if there is no more, then you move on.

Rep. Ramone: So the AG's office really just has no role unless you ask them a question for interpretation –

Mr. Newlin: Of the Statute or the law.

Rep. Ramone: So there is no role with the Attorney General's office with either of the 2. Ok, that is what I needed to know.

Rep. Kowalko: I have a few questions. The Appeal Board renders a decision?

Mr. Newlin: Yes.

Rep. Kowalko: If you render a decision to uphold or reject the referee's decision, is that final, and then let's go to a court.

Mr. Newlin: Once that decision is made, a decision is written and signed by the board members, it is mailed out. They have every opportunity to appeal it to Superior Court.

Rep. Kowalko: Ok, you do make a decision. The board is not a recommender, it is a decision-maker. You said and this is just to enlighten me, you said present new evidence. Is that a requirement for appeal?

Mr. Newlin: No, Sir.

Rep. Kowalko: You know sometimes the Superior Court says I don't care if you…you have to have new evidence. I'm glad to hear…that is the way that some of our laws work and that is unfair. I do have one other and this is purely for my own information, is it normal that an employer bring in an appeal would have an attorney?

11 Mr. Newlin: Some do and some don't. It is not a normal thing.

Rep. Kowalko: Is it normal that an employee would have an attorney?

Mr. Newlin: Some of them do and some of them don't. They are allowed to be represented by counsel.

Rep. Kowalko: Ok.

Rep. Bennett: Yes, that was my question. Actually, I was just wondering if there was any – do you have the option of bringing an attorney – either side, no matter what type of corporation it is?

Mr. Newlin: Yes, either side.

Rep. Short: I just want to ask that in just a completely different way. Is there any required representation by an attorney for either party at any particular time of any –

Mr. Newlin: No.

Rep. Short: Just at the discretion of the claimant or the employer.

Rep. Kowalko: Well, it really is an awesome responsibility that you bear. But in a way, it is facilitated by the fact there is an absence of an attorney.

Rep. Ramone: Can I get a point of clarity. You said about the process, and it obviously works when there are 5 of you. When there are 4 of you, if you split, I mean this is like the NFL, if the guy says he was in-bounds, and review says he is out of bounds - can you just give me –

Mr. Newlin: Ok, Representative, what you are asking me is if there is a 2-2 tie, that automatically reverts back to the referee's decision.

Rep. Ramone: Ok, so if there are 3 of you, and it is 2-1, it can overturn a referee's, or 5 of you, if it is 3-2 – anything else, the referee's decision stays intact.

Rep. Kowalko: But that is appealable to the Superior Court. Ok. I think we have protected the public as much as we can here.

Mr. MacPherson: I would like to add one comment. Corporations must be represented by an attorney.

Rep. Bennett: What type of corporation – I mean LLC -

Mr. MacPherson: Under the procedures of the Unemployment Insurance Appeal Board, in corporation or other artificial entity desiring legal representation, must be represented by an attorney at law, duly admitted to practice in the state of Delaware.

Rep. Short: I thought that was the question I just asked. Any circumstance in any way, is anyone required to be represented by an attorney – can you clarify for me –

Mr. MacPherson: And that is for the cross-examining of witnesses. So a corporation could come and present their appeal but if they brought their HR person or the manager that might have first-hand knowledge of the incident, they could present their case to the board, but they could not cross-examine witnesses.

Rep. Short: Unless they have an attorney.

Mr. MacPherson: Correct. 12 Rep. Short: So, please list again those entities so I'm very clear on the entities that we are talking about.

Mr. MacPherson: At any hearing, a party may appear pro se or be represented by an attorney at law duly admitted to practice law in the state of Delaware. A corporation or other artificial entity desiring legal representation must be represented by an attorney at law duly admitted to practice law in the state of Delaware. Again, a corporation can pursue its appeal – they just cannot cross examine witnesses.

Rep. Short: In fairness on this, we have the 2 of you at the table. You are in a dispute. This is the employee, and you are the employer, and you want to cross examine – you have to have the attorney. Does the employee have to have an attorney?

Mr. Newlin: No.

Rep. Short: And this…that you are talking about, could it be a LLC or a corporate entity that might be…2 employees that now has 1 less, so we are – I want to understand the fairness of that requirement when in fact we had passed laws in this state that require people to now buy workers compensation insurance and may in a majority of situations have now formed LLC's to obtain the exemption on which they have always been available to have had, but because they have changed now to this environment, - I'm hearing a lot from a lot of folks to have them come and hire an attorney to be able to defend themselves adequately before you. And this is placing a very unfair burden upon them with regards to the hourly rate that they are assuming in preparation at the time of the hearing, and then close to that. We are talking about a situation that I think – I don't know the math on this, but where someone says, I give up. It becomes a point of, when you get sued, that you settle out of court because it becomes less expensive to settle than to defend yourself. And that is why I – we get calls because we come to these hearings and I've gotten a good number of calls and I heard from someone earlier today about this issue that we are talking about right now. That is why I rephrased that question.

Mr. MacPherson: Representative Short, there are not too many issues where the board and the division and the department disagree. This may be one. I know that Secretary McMahon and I want to sit down and talk with Chairman Newlin about the possibility of amending this regulation because there is a relatively new court decision that came out I think in the year that Secretary McMahon took office or maybe the year prior where an employer did go to court over the requirement to have an attorney at an administrative hearing, and the court ruled in the favor of the employer. Unfortunately at the same time, the board was going through public hearings to have its regulations reviewed and they changed one word from 'may' to 'shall'. Where some of the calls that you are getting are derived from the fact that at the lower level, the appeals referee level, they are not required to have an attorney. Then if they appeal the referee's decision to the board, then they are.

Rep. Short: Correct, and I think, and I am so unclear on my comments from my colleagues here, I think we complicated that issue when we – I think the Workers Compensation…I remember the first hearing and I was new in this Chamber, and the only person in this building that sold insurance, workers comp, and we changed that and amended that Senate bill to allow the LLC to still self-exempt themselves. So I think we created a bigger issue in that regard right there because then all these folks are paying $100 to be an LLC and not paying the cost for workers comp.

Mr. MacPherson: I think that could be easily remedied as I said with Secretary McMahon, myself and Chairman Newlin getting together and talking about the board's regulation and amending it.

Rep. Kowalko: I have a question here. Is there the same applicability of unemployment insurance as there is of workers comp? I understand what you are questioning about that, but the LLC option was taken because of the requirements of workers comp, correct, not unemployment insurance.

Rep. Short: No, but what is… and legal, a vast majority of legal entities in the Delaware world that formed LLC's or any other –

13 Rep. Kowalko: And put themselves in the category of no matter how few employees they have, they still have a required…call a lawyer. Just to hear the other side of this, I think that a lot of this, requirement, and I don't know the reason, I'm not involved in that, but a requirement of having the attorney, was to protect against maybe a well- healed corporation by imposing an unfair decision and justifying that unfair decision at an appeals board hearing by having an attorney available that they can afford. The unfortunate consequences I think are the LLC option being taken which puts much more – or much less affordable entities under the requirement of having an attorney, is what you are saying.

Rep. Short: No, I am saying it puts a lot more people in the requirement –

Rep. Kowalko: No, no, I'm saying that it takes –

Rep. Short: DuPont, or W. L. Gore, or whoever, they are coming with an attorney irrespective of what the case is. HR is probably not showing up, I suspect. If you've – take my business, it is a 4 person business, and it is an incorporated business, and then we have another one which is an LLC which is 2 full times and 1 part time. Under that requirement, we have to cross examine, we would have to have an attorney present. So now I am looking at $900 to get to the cross examination, and I'm probably going to say I'm going on my own – I can't cross examine, so I am going to have to do other evidence or I just give up.

Rep. Kowalko: And I appreciate that. But I have experienced as a union rep at the refinery, a very big corporation known as a catalytic at the time, and they would send their HR person to these hearings. And they didn't spring for an attorney and the HR person certainly wasn't bound by any legal ethics to restrain themselves from whatever point of view. I think there was a legitimate purpose to having an attorney required so that you couldn't have a charge brought, an appeals brought lightly.

Mr. MacPherson: Well, the genesis of it was the unauthorized practice of law in the court case where the employer prevailed, the court ruled at an administrative hearing that that unauthorized practice of law did not apply, and that the employer, the corporation did not have to be represented by an employer to cross examine.

Rep. Kowalko: And I appreciate you looking into this. I don't know if you bring it as a recommendation, certainly, we can do that.

Rep. Short: I've heard a little bit of consent here and I've heard some willingness to work on it which I think is great. I think the world has changed and I think you have to change with it. I think if you want to represent yourself and cross examine, you ought to be able to do that. I think, and it is up to the chairman – I've heard good things about the chairman controlling the meetings, so I think the back and forth issue is not as…

Rep. Kowalko: I think it is very identifiable discussion that we should be having. I would also ask that if you could give me – would it be appropriate to have numbers of how many cases brought by an employee that were decided in their favor and how many appeals brought by – do you have that in there? Ok. Is there a disparity – has there been –

Mr. MacPherson: I think what is interesting is seeing where it goes from claims deputy to referee, to the board, to the court – Superior Court to the Supreme Court, the percentages are very much the same. Very little discrepancy.

Rep. Kowalko: Very little movement when you get past that.

Mr. MacPherson: Correct.

Rep. Kowalko: I am just interested in ensuring that we don't lower any protections because of affordability on the employee. So when we have the discussion, I would appreciate that we have a discussion about that before we come to the final vote on a recommendation, if that is ok with you, Representative Short. I don't like to go off on

14 a direction that may compromise something, although I do understand the concerns of businesses, such as yourself. And put in that predicament where you are going to have to hire an attorney.

Rep. Ramone: Representative Kowalko, I absolutely agree with your last statement, but I would take off a couple words. I don't feel that the process should make it unaffordable for anyone to be able to partake and I have several little businesses, none making a million dollars or tons of money, and for me, you need to – I would just like to throw out there the process. The process is that you've already gone to a meeting – you've already had your CEO and maybe your HR person or whoever, - you have 2 or 3 people going to this meeting to be able to give articulate, correct information. So the employer, - I can't say, Mr. Kowalko, and Mr. Short, you guys both work for me, come to this meeting with the state board and I'm not going to pay you because I might lose. I've got to pay my people to be there. I've got to present something myself. I've got to come back for an appeal if I won – I mean, just to throw out on the table, we had a gentleman in one of our companies who not only quit, stole a truck, didn't bring it back for 2 days, got a criminal conviction, was on parole, and we lost! We lost! So we appealed it and we won the appeal. Because we didn't bring the police report to the first meeting. Now we had 3 people that knew he stole the truck, we had to drive there to get the truck and bring it back, and we lost, so we had to appeal. My point was, ok, now I won the appeal, but did I win? Well, let me tell you, I paid 3 people reasonable salaries to come to 2 meetings, which took 6 or 7 hours, plus my own time, and if I add up what it would have done to – because we don't lose many people, it might have been cheaper for me just to say, give him the money. So I like your statement, I agree with your statement, I would just like to say we don't want to make it unaffordable either.

Rep. Kowalko: No one is sitting here saying I want the cost to be the driving factor in fairness and justice. So let's right now, I appreciate your personal story, but I have one more request of the board if possible. I have the breakdown of the cases, is there any way that you can, just to assure me, when we have the discussion about the rights or the requirement of an attorney present, is there a way to break down the percentage – if the cases with an attorney have mirrored the cases without an attorney, that would be satisfactory to me that an attorney requirement isn't necessary. Do you know what I'm saying? If there is preponderance with an attorney…

Mr. MacPherson: And that certainly is not a data element that we capture in our audit. We have to go do it manually.

Rep. Kowalko: And I appreciate that. Again, I will proceed cautiously on my judgment because I don't want to deprive individuals of an opportunity because they are out money. But I do appreciate what Representative Ramone said. So we will move on and we will consider that from all aspects when having our meeting – all points of view which may be healthier than just sitting here and discussing it.

Ok, going to the next point for consideration.

 Per the UIAB, Board members should become members of the National Association of Unemployment Insurance Appellate Boards. (Opportunities for Improvement)

I think that is a good recommendation coming from the board.

Mr. MacPherson: It is a minimal cost. The Division certainly would not oppose that.

Rep. Kowalko: Certainly I think this adds a layer of validity to people that might question. Again, how come you don't have an equal number of this or that represented on that board. Well, if you have the legitimacy of being a national associate, that gives you a certain level of respect that you certainly earned, but it will be there for people to reflect upon.

 Per the UIAB, Board members should be given the opportunity to attend national seminars, meetings, etc. to enable interaction with peers from other states. (Opportunities for Improvement)

I presume this is the board recommendation that will involve costs. 15 Mr. MacPherson: And certainly a funding was available. We would not object, in fact, I don't know if Chairman Newlin has attended it, but there is an organization called the National Judicial College that has a lot of different offerings about unemployment insurance, workers comp, etc., and one of their offerings, historically has been expressly for either appeals level referee people, or unemployment insurance board members. There is one example right there that would be right on point that the Division would certainly be willing to fund.

Rep. Kowalko: We will entertain, certainly first, on this matter.

Rep. Bennett: On this same line is that I know the state has moved a lot into this, - video conferencing and on- line type training, is there any – do any of these associations provide that now that you know of?

Mr. MacPherson: I'm not aware of that, but the Dept. of Labor, - we do have that type of equipment so if such training was available, we could make use of it.

Rep. Bennett: That may be something to look at.

Mr. MacPherson: Technology wise, we are way ahead of the curve. At all of our locations, we can have teleconferences, video conferences, so we have the technology in place at all of our departments.

Rep. Kowalko: I would just offer as a perspective as a member of this committee, and not as the chair, and certainly not - the fact that when I look at this, I see a definite advantage, but I also look at this as a – all board members being eligible to do all things, or go anywhere and the expense of that. I can see refining this request and I would ask the committee consider moving forward – refining this request to perhaps a limited finite amount of meetings for the chairman, and that the seminar money, fees being paid – when you start getting into travel expenses, I can write up a $3000 bill to go to the NCSL because they have 2 forums. One was paid for and we were restricted to one meeting a year. I gladly did it, because I knew the advantage it would give me and I know that you appreciate the advantage that it would give me, but I am hesitant to explain to a taxpayer why we are allowing, permitting travel – even though they may be necessary.

Mr. MacPherson: And what we have done in the past is that we do have procedures in place at the departmental level or when individuals participate in training, the approval process is the requirements, and in the past, we have applied those same requirements to board members when they have attended the training, such as the National Judicial College. So, and not saying that they ever have, but if they would ever ask for a training session that was totally unrelated to their job function, we would exercise our right of saying that it is not job related and we wouldn't approve funding for it. So that mechanism is in place.

Rep. Kowalko: You do have a mechanism then to give the opportunity to attend that.

Mr. MacPherson: And also what kind of training can be taken – the parameters, per diem, etc. and that is under state law.

Rep. Kowalko: And that is perfectly acceptable to me. I'm just trying to see through why this would be a recommendation given this is something you already have because again, we have to justify even our requests for travel now and I'm not saying for us. I'm just saying that when you have - give me some more details on what you need as opposed to what you already have. Would that be a fair request?

Mr. Newlin: I would say, Mr. Chairman, that I believe Representative Bennett has a great idea there of the video conferences. If the director can find out what is available from the Dept. of Labor, federally wise, and we can have that at Fox Run, or in Dover, and have the board sit and go through some classes – that would be an excellent idea.

Rep. Kowalko: And I appreciate that. Again, I would suggest that if there is a more detailed need for access to those provisions to be able to do that – enumerate that, and we will look at both sides and coming out of this 16 committee, whether we agree or don't agree with that kind of request. But I certainly appreciate your willingness to compromise on that.

 Per the UIAB, an updated version of the Delaware Unemployment Insurance law book should be provided to all Board members. (Opportunities for Improvement)

Mr. MacPherson: I can address that. What we had done up until 2002 with…then with Lexis Nexus, we had a special booklet with only Title 19, the unemployment part of the Delaware Code printed. But to get a good price, you had to do it in bulk. And it became very pricey, and once the Delaware Code was put on line we stopped orderly this book not only for staff within the Division, but for the Unemployment Insurance Appeal Board, because you just can't order 3 or 4 books, it had to be 100's of books and you are talking, $20,000 or $30,000. So once the Code was put on line we discontinued it. The last time we had it done was in 2002.

Rep. Kowalko: Any questions? Ok. [Moving on to the last point for consideration.]

 Per the UIAB, a security access feature should be added to the “double doors” in the Dover Department of Labor office hallway that leads to the conference/hearing rooms and staff lunch area. (Opportunities for Improvement)

Mr. MacPherson: On that one, I might need some clarification from Mr. Newlin, but it is my understanding that the doors that they are referring to are the double doors in the Dover office which I understand is a fire exit. Now, if they are talking about the actual door to the board hearing room, that is doable. But is my understanding that these double swinging doors that I have been advised, are the doors in question, are the fire exit and to put swipe card access would be a violation if I am talking about the right set of doors. That is why that hasn't been done.

Rep. Kowalko: If you agree with that, you can right that –

Mr. Newlin: I agree with Mr. MacPherson that that is the double doors we were discussing, but if we can have the swipe taken and put on the hearing room door, that would be even better.

Rep. Kowalko: Ok, have that discussion and again, notify our analyst that, ok, we've agreed that this is what we need and that way it will make it easier for us when we decide –

Rep. Ramone: Just a point of clarity – the fire door got me confused. We are talking about getting out of the building – you just push the bar and go. This is only to get into the room of the building, or am I misunderstanding.

Mr. MacPherson: It would not – it would be locked.

Rep. Ramone: Like here – you can still go out the door even without a swipe – you just push the bar and go because of a fire exit. But you still swipe to come in. I'm not sure what door we are talking about.

Mr. MacPherson: Again, I'm not -

Rep. Ramone: Again, I'm just saying it enhances the safety of the people in there for whatever reason to keep it locked and not let it – or even the security of information. I think that is probably important. I don't think there is a way to put the doors onto the fire code – you can still get out.

Rep. Kowalko: Can I call the Secretary of Labor – do you see – I believe that the Dover Department of Labor office is the building – the double doors – is a public access area. So just putting a swipe card on every public access building is not only going to intimidate people from coming into it, but also may not be appropriate.

17 Secretary McMahon (not near a microphone): …Tom, I am going to rely on you…we made some changes as to who could get in and out of there…

Mr. McPherson: I think what happened was we weren't sure what door they were talking about. In fact, we actually went out and got a cost estimate to put the swipe card reader on the actual hearing room and we were subsequently advised that was not the door that was in question. We did something for the appeals referee's room.

Rep. Kowalko: If I may, could you please continue that dialogue and come with more clarity. Any compromise you reach.

Mr. McPherson: If that would resolve the issue with the board, with Mr. Newlin having a swipe card reader on the actual board hearing room, that is not a problem. The Division would certainly be willing to.

Mr. Newlin: I think that would help on security somewhat…

Rep. Kowalko: Now that we’ve arrived at that point in the meeting where we will open it for public comment.

Rep. Ramone (microphone not on): Please don't read into this – I just need clarity. You stated number 1 that the Delaware Code 19 Titles 19 and 29… not familiar with that…so if you could help me out a little bit. Establishes the Unemployment Insurance Appeal Board…where I'm confused.

Mr. McPherson: Within the due –well, that's my language.

Rep. Ramone (microphone not on): …me not understanding.

Mr. McPherson: It is the second level of appeal within the Unemployment Insurance program.

Rep. Ramone (microphone not on): …basically an appeals board process and it is always in place this way, correct?

Mr. McPherson: Well, yes. There was a commission form of government until I guess, 1970 or 1971, but yes, the board has always functioned as a second level of appeal. The appeals level after the appeals referee level.

Rep. Ramone (microphone not on): So you are stating what is already in place.

Mr. McPherson: Yes. I just wanted to emphasize the point that there is a distinct connectivity between the Department of Labor, the Division of Unemployment Insurance and the Unemployment Insurance Appeal Board. I as a Division Director certainly do not try to influence nor would I, any decision that the board makes. But we are connected because they are the second level of appeal. So customers of the Division and I think rightfully so, believe that there is a connectivity there. When they are dealing with the board, they feel they are dealing with the department, they are dealing with the division. And we do work hand in glove.

Rep. Ramone (microphone not on): …thank you.

Rep. Kowalko: Representative Ramone, sometimes confusion is in the Title and what the board represents itself as its own entity and the division that it is under and there can be some confusion. But I think it was explained very well.

V. Public Comments

Rep. Kowalko: As a reminder, there is a 3 minute limit for each person from the public to address the Committee or a 5 minute limit if you represent the entity.

18 E. Ray Quillen: My name is Ray Quillen. I am the Administrator of Courtland Manor Nursing Home in Dover. We are a health care facility that cares for approximately 65 patients, and we have 112 employees. Until recently, we were very proud and blessed to have an experienced modifier for unemployment compensation of .5% which I understand is the base rate and can't go any lower. We have now been a recipient of a 62% increase in that base rate as a result of the last calendar year of unemployment claims. We have a special requirement within health care. We are looked at very stringently by a number of regulatory agencies. We have regulations that would stack to the ceiling as a minimum in this room on 8 ½ x 11 papers. We have to be extremely careful with our employees. We are very proud of our workman's comp record which would indicate that we are a good employer. We don't lose employees or discharge an employee frivolously. We have an extensive policy and procedure manual giving the employee their expectations – what they can expect from us and what our expectations are of them.

However what we have noted over the last year, when we had an unemployment case that we are following is that if it gets to the point of the commission, it will be granted, no matter what. We've actually had 2 cases of employees that have been placed on the patient abuse registry, sorry, the adult abuse registry in the State of Delaware, who collected 26 weeks of unemployment. Unfortunately, that system doesn't work as fast as the unemployment system does. But because of that, we are trying to watch the reaction of what happens when we go before the appeal board, and we are a little dismayed to find that various board members will ask of someone providing sworn testimony, - oh, did you mean to cause harm to that patient, or to do a bad job - which to me is extremely leading and of course there is only one response to that, which is – no - which then is accepted by the board. I was disappointed to see that someone I believe was a Deputy Attorney General sitting there totally silent during that sort of interchange. So it has led us to believe that we are looking at a rubber stamp when it comes to the unemployment commission which if memory serves me a few years ago, we went through a similar situation.

We believe that right now even though the law requires the employer to show willful or wonton misconduct, we must show willful misconduct. Wonton doesn't catch it anymore. And by the way, I am not politically correct and never will be, so I step on toes, but at least everyone will know where we stand in un-couched terms. This is just what we are running into. This increase in the unemployment compensation that we are going to start paying in January on our quarterly payments isn't going to break us. The other increases we are going to have aren't going to break us. The 4 year freeze we had for Medicaid, isn't going to break us. The 12% reduction Medicare just hit us with this year, that won't break us. Put them all together, and we might be looking at another 112 people going down to the Unemployment office looking for unemployment benefits because there is no way to go. To recoup all these additional costs of which this is just a small portion.

When I go before the unemployment commission, I just feel hostility – I'm the employer, I'm automatically the bad guy. And I have been told by our legal counsel and others, that we are too generous and we give too much trying to retain our employees. And if we just jumped on them, immediately terminated them, we'd probably be better. I have now been advised by our legal counsel, yes, that legal counsel should be present at every referee hearing and at the commission hearing or you don't stand a chance. This is the public perception. Those of you who have businesses have run into similar things of this nature. When does it stop. Do we have another entitlement program here. Is that what it has turned into here. That is my concern not only as a business person but as a tax payer, as a citizen of Delaware. So that is my concern in a nutshell.

Rep. Bennett: I was just curious what type of abuse did these prior employees –

Mr. Quillen: In one case it was neglect and in another case it was physical abuse.

Rep. Bennett: So neglect in your type of business could be –

Mr. Quillen: A failure to carry out the prescribed care plan in the manner that it is written. In other words, doing a really lousy job is a criminal act in the state of Delaware in a nursing home, but that is not enough for unemployment. So I have not maintained the employee there because it creates a huge liability as well as my absolute requirement to guarantee the safety of our patients.

19 The other thing I didn't mention was comments have been made in the past-- well, does that patient complain a lot, or is she old? Well, most of my patients are old. Unfortunately some are younger than I am at the present time, but I am seeing a marginalization of my patients and it ticks me off… because of all else, I am a patient advocate. All of this ultimately drops on are patients. Unfortunately in our current health care scenario, 80% of the cost of health care is borne by the government and I'm sure you are all crucially aware, critically aware of the effects of Medicaid on our budget in the state of Delaware and what it is doing, but also on the federal side with Medicare, the Veteran's Administration, so that is my concern.

Rep. Kowalko: Before you start, Representative Ramone, I am not going to entertain and debate on a hearing that had occurred in taking one side or having a debate here.

Rep. Ramone: Not intended. I agree. Just a quick question. I was curious. Did you say you only had 1 negative – I'm sorry, I didn't hear – I heard you say 1 person and they went on unemployment. Are you stating there have been multiple situations?

Mr. Quillen: I've had at least 2 employees – ex-employees, who ended up on the adult abuse registrar that were successful unemployment candidates.

Rep. Ramone: Again, not asking, when you came out of your first meeting, before you went to the referee, were they ruled in your favor and the employee appealed or against you when you appealed?

Mr. Quillen: That was my appeal. I had actually been asked at one appeal board hearing whether the state had prosecuted the individual yet. Obviously I can't speed up the prosecution process or elect which cases the Attorney General decides to go for in the prosecution. The Abuse Registry is not done by the AG…by the Division of Long Term Care Resident's Protection.

Rep. Ramone: So basically you've had 2 in particular that you felt were maybe a little more egregious in your opinion, but both you had lost and then appealed, so going in front of the review board, they were already looking at a loss and then they had to overturn that, that is what I am trying to get clarity on.

Mr. Quillen: No, I had a loss.

Rep. Ramone: Yes, you had a loss, so then to rule in your favor, they would have had to overturn that loss, I'm thinking.

Mr. Quillen: That would be correct.

Rep. Ramone: And were both times, 5 people there, or 4?

Mr. Quillen: I don't think I've ever been there for 5 people.

Rep. Ramone: Was it 4 or 3 or do you remember?

Mr. Quillen: 3 or 4, normally.

Rep. Ramone: I'm asking from the standpoint of whether we get 7 instead of 5, that's all.

Rep. Kowalko: I'm going to tell you, as the Chair. We are not going to debate a specific case when we have none of the details before us. We weren't privy to the details, and we are not going to do that in this committee.

Rep. Ramone: Ok. Please understand, Representative Kowalko, that wasn't my intention.

20 Rep. Short: I'm just curious in this case, did you appeal beyond that to the court?

Mr. Quillen: No, it is not economically feasible to do that. That is why.

Rep. Short: I just wanted clarification on that. Thank you.

Rep. Kowalko: Thank you, Sir. And I don't want you to think that we disregard what you are saying here. The fact is that the specific cases can weigh heavily in favor of one way that is not the decision that was made. That is not ours to reflect upon here. We are trying to certainly ensure that this board does its business appropriately and fairly and with justice as the foremost objective. Thank you for coming in. Anyone else from the public wishing to speak?

VI. Concluding Remarks

Rep. Kowalko: I want to thank everyone for being here. I want to thank the Unemployment Insurance Appeal Board members and staff, especially Tom McPherson and Mr. Newlin, thank you for coming here in spite of the fact that you have been under the weather.

And for reference throughout this process, both prior to this evening, during the draft report compilation phase as well as tonight's public hearing, I would also like to thank the members of the public, the various entities, and other stakeholders for their attendance and participation tonight, and especially thanks to all my committee members. I do appreciate your being here. We had a circumstance today where 3 or so unanticipated absences, and one anticipated.

A tentative date and time has been identified for the Unemployment Insurance Appeal Board recommendation meeting and that is Thursday, March 22 at 10:00 a.m. We will continue to meet in the Joint Finance Committee hearing room provided the Joint Finance Committee is not meeting at that time. A confirmed date and time and location will be posted on the General Assembly website in the coming weeks. Public comment will also be continued and also will continue to be received until the recommendation meeting.

Mr. Quillen, if you would please put your comments in writing so that we can have those as part of the record.

A friendly reminder to all Committee members, our next public hearing is scheduled for next Wednesday, February 22nd at 5:30 p.m. for Delaware Health Resources Board.

VII. Adjournment

The meeting adjourned at 7:07 p.m.

21 Mr. Quillen's letter follows which was submitted to the Committee on February 9 supporting his verbal comments at the public hearing on February 8.

My name is Ray Quillen. I am the Administrator of Courtland Manor Nursing Home in Dover. Courtland Manor had as enviable Workman's Compensation Insurance modifier of .5% which I understand is the lowest rate, indicating that we have very few unjustified terminations. We work very hard to educate and train our employees as well as giving them an extensive personnel manual delineating their rights and responsibilities.

In health care, employees must meet much higher standards than normal as failure to perform results in patient harm. In many cases this failure to perform can become a criminal offense of abuse or neglect. In 2012 we have seen a 62% in our experience modifier. We have noted a disturbing trend in the Commissions actions resulting in funding for the employee in all cases brought to the Commission 2011. We have noted Commission members asking leading questions of the employee (i.e., You didn't mean to hurt the patient did you?). The person we presumed to be a deputy AG sat silently during such interchanges. Questions to the employer were on the lines of what other agencies have done (i.e., has the employee been prosecuted for abuse?). In short the Commission creates a hostile employer environment rather than a "fair hearing".

The Commission appears to require that the employer prove WILLFUL MISCONDUCT versus willful or WANTON misconduct as specified in the law. Complaints originating from the patients being served are often "marginalized" when referees or commissioners ask leading questions such as "Does the patient complain a lot? or .... Is the patient confused or demented?" Such complaints carry very little weight or credibility. Employee statements without proof carry more weight than does an employer statement backed by multiple documents even when signed/acknowledged by the employee! This is true even when both are under oath! In short the employee who persists through a Commission hearing will prevail and the Unemployment Compensation program becomes another wide open entitlement program. We have experienced two cases where former employees were put on the Adult Abuse Registry but were successful in obtaining unemployment compensation (one for an entire 26 weeks).

The rate increase we have experienced will not cause us to fail financially. Likewise the 4th year of frozen Medicaid reimbursement or 12% Medicare reduction, or increase in liability & Workman's Compensation Insurance won't cause us to fail, by themselves, but the combined increases/decreases could. We may with continued increases such as this be the next 112 employees seeking workman's compensation. Our revenues are about 80% State and Federal dollars.

As you are aware Medicaid is a major factor in the State budget and any increases to us is an increase to the budget of Delaware. As a business operator and citizen of Delaware, I am concerned that a Rubber Stamp Commission is occurring. This is something which we can not afford.